Question for you guys with Self-Employed Business

[Pat Engh]

I work for a non profit (day job), but i want to do side jobs and also work with other non-profits for a tax write off. How should I go about this? Do i need some kind of license? Any advice?

[Josh Laronge]

Pretty much everything you need to know about doing business in FL from fictitious name filing to incorporating to sales tax is here: MyFlorida.com - Home. As far as working for non-profits for a tax write off, you should consult your accountant about that.

[Chris Hurd]

Moved from Open DV to TCB.

[David W. Jones]

Originally Posted by Pat Engh

I work for a non profit (day job), but i want to do side jobs and also work with other non-profits for a tax write off. How should I go about this? Do i need some kind of license? Any advice?

I don't know about Florida, but where I live you can't write off your time. Only tangibles like cost of recording tape and DVDs.

[Shaun Roemich]

The advice MY accountant gave me given MY specific situation:

"You're further ahead to work for full rate for a paying client and take the money you earn and DONATE it to a charity, getting a tax receipt, than donating your sweat equity IF the tax benefit is what you're looking for. If you want to feel good about giving back to the community, have at 'er!"

[Calvin Bellows]

I agree with Shaun, get paid then donate if you want to write it off on your taxes.

[Chris Davis]

Doing work for non-profits as a tax write off won't work. You can't deduct the value of your work, you can only deduct actual cash donations or the value of physical materials.

For example, if I volunteered to make a video for the local United Way, I'd only be able to deduct mileage and maybe a few materials (like the cost of blank DVDs.) I would not be able to take ay kind of tax deduction for my time.

[Steve House]

And remember, to be able to deduct any of your expenses you must make an income from the activity or show you are making a bona fide effort to do so.

[Calvin Bellows]

Could you send them an invoice and when you get paid make a cash donation of the same amount?

[Chris Davis]

Originally Posted by Calvin Bellows

Could you send them an invoice and when you get paid make a cash donation of the same amount?

You could, but it would be a wash, tax-wise. If you sent them an invoice for $10k and received a check for $10k, then wrote them a check for $10k, at tax time you'd claim $10k of income and $10k of deductions. You pay zero tax on that $10k. It's the same as if you just did the work for free. That's why the IRS does not allow you to take a deduction for a donation of services.

If your goal is to do charity work for free, just do it free. At least there's less paperwork.

[Nigel Barker]

Wouldn't taking the payment & then donating make your P&L look better which could have advantages. For example if you are looking for credit they look at your annual income & won't take any account of pro bono stuff that you didn't charge for.

[Chris Davis]

Originally Posted by Nigel Barker

Wouldn't taking the payment & then donating make your P&L look better which could have advantages.

Perhaps, but I was simply referring to the tax implications.

In the US, the income (after business deductions, but before charitable donations) would show as your Adjusted Gross Income, after which the charitable donations would show up in your itemized deductions (all of this assuming the business is operated as a sole proprietorship.) So there would be some benefits to showing a higher AGI, mostly in securing credit. However a large, disproportionate amount of deductions can trigger an audit.

[Jim Andrada]

An ant farting in the midst of a thunderstorm can trigger an audit!

Believe me I know! I went through a six month audit that was worse that six root canals without painkillers.

Why?

Because they needed some real world audit experience as a training exercise for a young examiner and they pulled three returns at random and I was one of the "lucky winners" so to speak.